The debt ceiling traces its roots to 1902. The US government wanted to build the Panama Canal and needed to ask Congress for authorization to borrow specifically for that project. During World War I, requesting such authorization on a project-by-project basis became too cumbersome to fund the war effort. To ease that burden, Congress passed a broad-based limit on how much could be borrowed.

Since World War II, that cap has been raised over 100 times!

Over the 20-year period ending in 2022, there were 20 debt limit increases and seven debt limit suspensions.

US Debt Ceiling: 2003 – 2022

Source: US Treasury Department

That brings us to the present: Congress must again come to a decision on whether to authorize additional borrowing. While disagreements over the debt ceiling may increase uncertainty for investors, Congress has historically always reached agreement and raised or suspended the debt limit.

If you have concerns over how the debt ceiling may impact your portfolio, please reach out to us and we are happy to discuss the impact it could have on your portfolio (both short and long term).

Posted in Debt, Legislation

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